Since the GST was introduced on 1 April 1994, the WP had opposed it as a ‘regressive’ tax. At every stage also when the GST was hiked – 4% in 2003, 5% in 2004 and then 7% in 2007 – the WP had opposed it.
Had it not been for the recent exchange in Parliament between Health Minister Ong Ye Kung and WP Leon Perera, Singaporeans would not have known that the WP no longer oppose the GST but merely oppose the 2% hike.
Why do I say this? Let me explain.
In his speech in Parliament (17 April) on the President’s Address, DPM Lawrence Wong said that while the Opposition has offered some revenue alternatives, their sums do not add up. This is because there would be a huge funding gap without the GST.
“The Opposition has offered some revenue alternatives, but their sums do not add up. .. But without the GST – and I’m not even talking about the increase in GST, but the entire GST, which the Workers’ Party still does not support – we will face a huge funding gap. None of the alternatives that the WP has suggested will make up for the shortfall.
The WP did not respond...
Here’s what Mr Ong said:
“.. to do more, one has to spend more, and one has to say where the money is to come from. However, the WP never supported the GST system. An alternate budget without the GST simply cannot work and is not a viable alternative. The sums just do not add up. You cannot give up a major source of revenue and yet want to spend more in so many areas.
Again, the WP did not respond..
Minister Ong asked again..
Here’s what Mr Ong said:
“But on GST and the Budget, I still don’t know if the WP support the GST system and in your alternate budget, whether you are contemplating not having the GST system. Because I do recall WP has always been against the GST system. And if that is the case, I would say it does not make sense. It’s not a viable alternative, nor a serious alternative because without the source of revenue, it’s not possible to do more.”
WP finally clarifies on their position..
It was only on being probed a second time on their position on the GST that Mr Perera finally said that the WP accepted the reality of the GST because the amount of revenue that is generated by the 7% GST is so substantial.
What WP supporters say
WP supporters told me that the WP accepts the reality of the GST because they did not have a choice. By this, they mean that there is nothing the WP can do to change a PAP policy. Now, we all know from Leon Perera’s response to the health minister that this is not so.
The arithmetic is simple
Think about it.
At 7%, the net GST collected for 2021 is $12.6 billion, just $1.6 billion short of the $14.2 billion collected from individual income tax in the same year. After the 2% hike, revenue from GST will surely surpass revenue from individual income tax.
Turning the GST into a very progressive tax system
It’s because we have kept it simple – flat, across the board – and collect as much as possible from the upper-income group through the GST and use that revenue to subsidise and help uplift the lower-income group.